Company ABC is proposing a rights offering. Currently there are $350,000$ shares outstanding

at EUR $85$ each. There will be $70,000$ new shares offered at EUR $70$ each.

Questions:

a$)$ What is the new market value of the company?

b$)$ What is the exchange ratio and how many rights are needed for the subscription of one

new share?

c$)$ What is the ex$-$rights price $($TERP$)?$

d$)$ What is the value of a right?

e$)$ Calculate the gross discount and the discount to TERP.

f$)$ Analyze the wealth effects for an existing shareholder owning $100$ shares of ABC for

both cases, no subscription and full subscription.